Payment companies are building mobile loyalty and financial literacy programs to target today's digitally-savvy kids, but are discovering a physical presence is still necessary for redemption.

“FamDoo meets kids were they live today—on their mobile devices—creating a way to bring families together through technology,” said Mark Lacek, co-founder and CEO of FamDoo LLC. FamDoo, which launched in January and has several thousand users, is a Web and mobile app that allows parents to add a chore, track their child's completion of the chore and then reward their child with FamDoo Points. After using the app to track chore completion, kids can use the FamDoo Points they earn to make an online purchase with the company's retail partners, including  iTunes, Best Buy, Target and Amazon. The points can also be used to donate to charities.

While FamDoo users can only redeem points for online purchases, the company is starting to see that kids want options to redeem at brick and mortar locations. Many of FamDoo's users are requesting a reloadable debit card that kids can redeem their cash-value points to and spend offline. Eighty-six percent of kids would choose to redeem FamDoo points onto a reloadable debit card, according to a national qualitative study the company did last year.

The company has been approached by several large banks in the U.S. and abroad about developing the debit card product, Lacek said. “We see this as a win all around—the kids get what they desire as a redemption  option and our partner gains access to the next generation of savers and spenders in a very consistent and powerful way,” he said.

Parents can purchase FamDoo Points with a credit or debit card and can also convert airline miles into points. The company has partnered with U.S. Bank to allow parents that are part of the bank's FlexPerks loyalty program to transfer their FlexPoints to their children's FamDoo account. Transferring 5,000 FlexPoints is equal to $50.

Some parents purchase large amounts of points up-front, while others purchase points when their children ask to redeem. The average transaction is $30, said Lacek.

“We see a range of creative partnerships with the FamDoo platform to provide rewarding experiences for both parents and kids; partnerships for new redemption options like a reloadable debit card, additional loyalty program partners to exchange loyalty currencies to fund FamDoo points, as well as content partners to bring even more enriching educational content to our platform,” Lacek said.

Allowance Manager, another allowance app, debuted with a Web-based digital cash ledger but has also received requests to expand into the physical world by offering a prepaid debit product. Allowance Manager has about 200,000 users.

"There is definitely an adult trend to use digital tools to increase personal productivity," said Mark Lacek, co-founder and CEO of FamDoo LLC.

But allowing for physical offline purchases is still important.

Oink, formerly Virtual Piggy, is another payment system geared to teens that allows parents to monitor and control transactions. The system was at first only a way for teens to make online purchases, but the company recently began expanding to include brick and mortar stores since the majority of teen's spending happens when they're at a mall. In February, Oink partnered with Discover to expand its presence offline.

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